Are CFOs from Mars, and CMOs from Venus? Part II - Mastering Marketing Fundamentals
Let’s start by addressing what marketing is and how it’s evolving. It’s first of all, a collection of disciplines, not just one or two activities. Many people think of marketing as being advertising, the website, brochures, trade show events and associated trinkets. I would encourage you to think of marketing as a collection of interrelated activities that:
- Attracts the kind of buyers a company wants to have as customers,
- Entices them to take note of the company and quickly learn why it can meet their needs like no other,
- Provides them with a path, enriched with experiences and content that accelerates their journey towards becoming a customer, and
- Finally, ensures their delight after the purchase to the extent they want to advocate, via word-of-mouth their positive experience to other potential buyers.
Great marketers create a sense of constructive anxiety with would be buyers. They understand customer key pain points and amplify them to motivate buyers to seek quick relief. There is nothing disingenuous about this process. Great companies serve customers by addressing key and real needs. Marketing is about making one’s solution-to-problem-resolution obvious.
One of the most fundamental shifts in the evolution of marketing is the impact our digital world has had on the process of buying. Think about this from a B2B perspective. In the past, sales people would rely extensively on cold calling, direct mail, and perhaps print advertising to reach prospective buyers. Companies selling products by and large, assuming that they have captured a buyer’s attention, controlled the information flow. Fast-forward to today’s digital age. The buyer now controls the information flow, relying heavily upon the Internet to access and deliver powerful content. The fact is that most buyers understand their pain points, have investigated solutions, have compared vendors and have even narrowed it down to a short-list of suppliers long before your company’s sales team even knows this person exists. The fact is that cold-calling and traditional networking can produce some results, but it’s not nearly as effective or efficient as attracting buyers with pressing needs through digital means. Most buyers today don’t appreciate being cold-called.
Who enables and controls the content exchanged in these digital conversations with would-be buyers? Marketing. Think of it this way: Marketing creates and facilitates the digital conversations with your buyers, constituting a virtual sales person that can scale well beyond your sales team, engaging in literally thousands of conversations per day. Buyers prefer it this way and look for relevant content to help them narrow down their search. They’ll let you know when they’re ready to engage with your sales team and when they do, you’re sales team can focus more on closing business versus prospecting for and educating new buyers. Marketing in this new world, take on a much bigger role in revenue generation and the ROI can be significant.
“Who are you targeting, with what messaging, addressing which pain points, and what responses do you expect?”
In our digital world, CMOs must have a clear sense for the buyers they’re targeting. Who are they, where are they, their business pain points, how they process information, what sources of information they look to, and what competitors are competing for their attention all need to be very well understood. Studying buyers, even spending time with them in a real-world setting, often contributes to this knowledge. I’ve learned that simply asking a potential buyer to recite key pain points is not enough. I’ve learned so much more by visiting people under the guise of research, and observing how they get work done. CMOs and their teams can conduct hundreds of interviews with buyer types and key influencers. One of the key questions a CFO should ask marketing when being presented with a marketing campaign proposal is: “Who are you targeting, with what messaging, addressing which pain points, and what responses do you expect?”
Here is a challenge for you, as the CFO. Given the list of CMO needs in the previous paragraph, how can you and your team partner with the CMO to extract and analyze data that provides critical insight to your CMO?
CMOs generally think in terms of the buyer’s journey. That is the path a potential buyer takes towards becoming a customer. The journey is frequently transformed into funnel and includes stages. At the very top of the funnel is incoming people, not buyers, or even prospects as of yet. This stage is generally oriented towards creating awareness, making someone aware of your existence and products. This interest might be generated based upon several top-of-funnel sources. First, it could be organic search. This means that someone found your company by initiating a search (say through Google) and your company’s name appeared in the search results. This usually implies, if the search volume is high, your CMOs team has done a good job of shaping content on your website that contains keywords searchers are including in their queries. It also suggests the content is good and visitors are staying on the pages, raising your credibility with Google. When your CMO talks about SEO (Search Engine Optimization) this is what he or she is talking about; simply optimizing the site, more specifically, content and code, to score well with Google’s algorithms and achieve high placement in search results. While you might need to pay an agency or experts to help to assist with this effort (notably around keyword research, including competitor traffic analysis), the payback can be significant.
Discussing the ROI metrics on SEO with your CMO is an excellent way to bridge the CMO/CFO communication gap and bring our planets a little closer together.
In addition to organic search, potential buyers might find you via paid search or display advertising. This generally means that your CMO’s team or agency is bidding for ad placement that presents your company. Similarly, you can target and engage audiences of social media platforms with fresh posted content (E.g. YouTube, LinkedIn, Twitter Facebook and Instagram). Other lead sources might include events such as tradeshows, email marketing, and customer referrals (which usually produce the highest conversions).
An area that deserves particular attention is the use of video as a medium in creating top-of-funnel awareness. And it’s a medium that integrates with all of the channels outlined above. According to studies conducted by HubSpot, video is projected to claim more than 80% of all web traffic in 2019. And 90% of customers surveyed reported that viewing product videos helped them make purchasing decisions.
CFOs interested in top-of-funnel spending should feel comfortable asking the CMO to present the associated analytics. One can discover which lead sources are generating the most traffic to the website. But perhaps more importantly, learn which lead sources ultimately, down the pike, turned into customers. Once customers are aware of your company and you’ve captured their interest, they may likely investigate your company and products further. From there, if they’re serious, they’ll compare you to other solutions in the market. And if that goes, well, they’ll move into what CMOs refer to the ‘consideration stage’ where they’re beginning to show signs of actually buying. Marketing builds out content, again aware of SEO optimizations that result in better visibility in search, aligning with each of these buyer journey stages.
The CMO should be able to share with the CFO what all of the funnel stages are, and over time, how many potential buyers are at each stage, and ultimately be able to predict how many leads will be passed over to Sales in the month(s) ahead and the percent of deals that will close (conversion rates based on historic data). Again, this might well take place well before Sales is even aware of the prospect’s existence.
Actions taken by prospects as they move through the sales funnel that demonstrates buying behaviors are generally called conversions. These actions might include downloading a piece of content such as a whitepaper or signing up for a newsletter. Over time, the CMO’s team learns how to optimize conversion rates. This can be accomplished through performing A|B tests, conducting surveys with prospective and past buyers, or analyzing past history. The idea behind A|B testing is to present competing forms of content, calls-to-action, or channels, to determine what drives the behaviors, in the right volume and velocity, that Marketing wants. Marketing should consistently be testing to determine what moves people along most efficiently. Conducted surveys can be both qualitative and quantitative, in nature. Both methods provide valuable insights to marketing.
One of the challenges for marketers is that while the funnel is a great tool, not all deals head down the funnel in serial fashion. Some buyers skip steps. Some take three steps forward, then two steps back. Some move forward, approaching purchase and then go radio silent, only to reappear six months later. But ‘best fit’ trends should reveal themselves. Emerging trends should be uncovered and when warranted, content, call-to-action, and channel adjustments made. Markets are not static, nor can be the CMO’s toolkit. Continuous A|B testing and surveys, can provide early warning signs of shifts that require adjustments.
Ideally, the CMO will be able to communicate to the executive team the status of funnel flow in volume and velocity, the status of content and its associated costs, the assumptions on conversions and the ROI on past spending and future campaigns. Insight is based on history, constant learning, with projections taking into account new learning. The CMO’s team can be an earlier alarm system to the business- indicating economic trends that indicate less demand or alternatively, a rise in demand. Either way, these “heads up” alarms can be a huge benefit for operational teams gauging capacity and required supply chain adjustments.
The CFO who understands these concepts and can help the CMO rationalize the return on the company’s marketing investment is a valuable resource.
The 3rdpart of this three part series, Are CFOs from Mars, and CMOs from Venus?, cover developing marketing budgets and insightful marketing metrics.
Not a member-scholar yet? Join our financial community here!
Identify your path to CFO success by taking our CFO Readiness Assessmentᵀᴹ.
For the most up to date and relevant accounting, finance, treasury and leadership headlines all in one place subscribe to The Balanced Digest.